Humana Earnings: Strong Start to 2024, but Management Pulls 2025 Guidance

We are keeping our $473 fair value estimate intact after narrow-moat Humana reported a strong start to 2024, as timing in administrative expenses helped the firm outperform expectations even with more conservative reserving due to the Change disruption on claims processing. Considering those factors, management did not alter its 2024 guidance and actually pulled its outlook for 2025 on the weak final rate notice for Medicare Advantage given by the Centers for Medicare & Medicaid Services in early April. Uncertainty surrounds Humana's near-term prospects, but we still have a solid view of its long-term opportunities. This view boosts our belief that Humana shares remain attractively valued.